SMSF Pink Diamond Accounting [Step By Step Complete Guide]

By September 27, 2021 Blogs

Pink diamonds are a rare and stunning colored gem mined in North-West Australia by Argyle Diamonds. SMSF Pink Diamond Accounting is still one of the world’s best-kept secrets, accounting for less than 1% of total output. Pink diamonds are prized not only for their stunning color but also for their investment potential.

Self-Managed Super Funds (SMSFs) members are more actively investing in Pink Diamonds via an SMSF to improve and diversify their portfolios for retirement.

My SMSF has many SMSF members that hold pink diamonds and for the last four years, we have provided SMSF administration services for fund members at arguably the lost price in the market.

Pink diamonds of investment quality have gained in value by an average of 35% in the last four years, according to Pink Diamond Analytics, Australia, and are still a popular alternate physical asset investment for many SMSFs members who seek security and un-correlated asset exposures in their SMSF.

SMSFs:

Pink diamonds mined in Australia are becoming increasingly popular among SMSF investors, due to their low volatility and regular price increases and given market risks that have recently seen more SMSF investors diversify into non-traditional asset classes for risk mitigation reasons in their SMSFs. The potential for diversification due to precious gem investments must outweigh the liquidity risk and administrative overheads.

SMSFs are the only way to hold Pink Diamonds for retirement. If your SMSF is investing in diamonds in order to spread risks, it must ensure that the SMSF Deed allows investing in Diamonds and alternate asset classes and that the fund’s investment strategy is updated.

At tax time, My SMSFs auditors and Tax agents will require SMSF Diamond investments to be valued annually, and for proof of security and custody to be demonstrated. Where these SMSF Diamond investments are held in a home safe, proof of insurance policies, and an accredited valuation and a declaration of ‘no personal use’ must be provided to the SMSF Auditor for Diamond investments.

Attributes of SMSF Pink Diamond Accounting:

  1. Pink diamonds are quite rare.

Generally, anything that is unique; like Pink Diamonds;  will always be precious. The item’s worth will rise as it becomes more uncommon or exclusive.

  1. Pink diamonds are in high demand.

Second, when demand for a product vastly outweighs supply, the price will always rise. The demand for pink diamonds grows every year, while the supply shrinks.

  1. Scarcity of pink diamonds

Argyle’s mining operations have now transitioned from above ground to underground. The number of SMSF Pink Diamond Accounting discovered in the Argyle diamond mine is decreasing as it nears the end of its existence. In addition, the number of high-end (P1 – P3) pink diamonds is dwindling. As a result, prices will rise continuously.

Pink diamonds are rare and valuable investments for an SMSF:

Pink diamonds are considered to be exceedingly valuable. Pink diamond prices have risen dramatically as their rarity and appeal have increased. As a result, they are frequently used as outstanding alternative assets in investment portfolios.

Color, Cut, Clarity, and Carat Weight are the four basic criteria used to evaluate diamond quality.

Unlike white diamonds, where all four Cs are equally important, the color of a fancy-colored diamond is the most important feature of all. These qualities may fit the sole purpose test definition of a suitable retirement asset, provided that they are maintained at arm’s length and in compliance with the super laws.

Third-Party Storage for SMSFs:

All of My SMSFs clients that hold pink diamonds do so, by storing them with independent vault providers, who provide an annual valuation and make sure the assets are insured and managed at arm’s length from the members of the SMSF.

Vault Providers:

Some of the vault service providers like Reserve Vault and Guardian and Custodian vaults have put in place a rigorous, auditing process and they maintain documentation showing the evidence of your diamond holdings within your allotted safety deposit boxes as part of their seamless service.

Investment in Pink Diamonds, via Self-Managed Superannuation Funds:

SMSF Pink Diamond Accounting is becoming an increasingly popular asset for some SMSF members, who are concerned with market risks and wish to hold intrinsic assets to safeguard their self-managed superannuation plans (SMSFs). There are clear tax advantages to purchasing Pink diamonds in your SMSF since you would pay significantly less tax, but there are a few drawbacks that members must consider.

  • Pink diamonds cannot be worn
  • It has to be bought by your fund and maintained at arm’s length

Before making any decisions on purchasing pink diamonds in your SMSF, you should always consult with your financial adviser or a specialist Diamond provider.

Why Should You Invest in Pink Diamonds via an SMSF?

The supply of pink diamonds is running out as the Australian mine that produces these priceless jewels approaches the end of its life cycle. It’s also worth noting that the global demand for rare colored pink diamonds currently outnumbers the global supply. five reasons why individuals invest in natural color unusual diamonds are listed below.

  1. Demand and Supply

According to financial analysts, demand for Australian pink diamonds would outstrip supply in the worldwide market. As a result, prices will skyrocket, opening up the potential for massive long-term returns.

  1. Growth in Value

Pink diamond demand is expected to outstrip supply in the future, according to financial analysts. As a result, prices are expected to rise, opening up the potential for massive long-term returns.

  1. Asset Protection

Pink diamonds from an Australian mine can be easily transported around the world or passed down from generation to generation as a family store of value asset.

  1. The ability to diversify

Market volatility is mitigated by having a well-diversified investment portfolio. In the last ten years, the cross-asset correlation has nearly doubled, but diamonds have seen none of this.

  1. Hedge against the currency.

Diamonds are always valued in US dollars, which acts as a natural buffer against the Australian dollar’s depreciation.

CONCLUSION:

Check to see if the diamonds you’re buying are officially certified. While there are a number of gemological laboratories that may certify diamonds, the Gemological Institute of America (GIA) reports are the most widely accepted. It’s worth noting that the GIA grades all diamonds, including those of inferior quality. As a result, not all diamonds with a GIA grading report are good investments.

Working with a qualified diamond broker may be advantageous if you are unsure of a diamond’s quality or need assistance locating the ideal diamond for your SMSF portfolio.

While investing in diamonds can be profitable and tax-effective in an SMSF, it can be a good way to diversify your SMSF as well. However, it may not be the best option for many SMSF members, due to their circumstances or level of experience.

Make sure you update your SMSF investment strategy and that your deed allows investing in SMSF Pink Diamond Accounting. Further, you must ensure you meet all of the audit and accounting requirements, to value, insure and hold these assets independently.

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